Ah, Spring Break season. A time for traveling and or sitting at home alone, crying, and watching Netflix. A time to focus on your summer body and or throw caution to the wind and eat anything with the word “fried” attached to the title. A time for getting ahead on your work or wallowing in glorious procrastination. Regardless of the option(s) you choose/chose, it is highly likely that music is somehow involved, whether you were the one making it or you were just streaming it to the device of your choice. Hold up, did I just say streaming? You know what that means! Time to talk about Spotify, yay!
In retrospect, that was one of the worst segues I’ve written. I’m sorry my brain is on a traveling hangover, but I’m not sorry that you read that. You get what you pay for and this blog is free.
Spotify. We know it, we love it, we use it, we think it’s less of a douche bag than Apple Music. While most of us think this company is pretty cool and supports the industry, it’s sitting on a huge volcano of debt which could erupt any day now. Despite the fact that the company is worth $8.5 billion, Spotify took out $1.5 billion in loans just last year alone. Wall Street continues to reject Spotify’s public listing and desire to sell stock because the company isn’t making enough money. What is Spotify to do?
The answer lies within premium subscription. Spotify is fated to introduce premium-only content to their streaming empire. This is going to look something like offering the biggest album releases to only premium subscribers for a short period of time before unleashing it to the general public. By creating these exclusive content deals, Spotify can now ink deals with the major labels to lower their licensing rates.
The thing about Spotify and licensing is that long-term licensing is really expensive. It is so expensive that Spotify typically can’t afford long-term contracts. Instead, Spotify mainly runs on short term licenses, effectively draining the company of funds. Long-term licenses are more politic, but the licensing fees have always been too high for the streaming giant. With this new exclusive content deal being arranged, major labels will be willing to negotiate down their licensing fees, as Spotify has proved to be a valuable asset to the major labels.
Personally, I’ve got mixed feelings about this. Apple Music’s endless amount of nauseating exclusives are draining hopes of artists making money directly off their intellectual property. When something becomes an exclusive, you’re almost putting it on a horse and then smacking the horse so it only travels faster to Pirate Bay. At the same time however, Spotify is in a financial mess and a half, so something like offering exclusives and working with the major labels is absolutely helpful for the company, in terms of accruing subscribers and moving toward financial security. Even though I’m of the opinion that exclusives hurt artists more then they help them, I can forgive Spotify on this one.
For the future, despite how much I hate them, I think we’ll be seeing more and more exclusive streaming deals. It’s honestly just a matter of who you root for and whose sins you can more readily forgive. It is also safe to say that, as the cost of licensing goes up, we’ll be seeing more licensing negotiations to keep streaming services afloat, as well as streaming services that die because they can’t pay up or get themselves out of debt.
If you’d like to read the article that prompted this update, click here.
Once again, this has been the view from 214.